Divorces later in life are becoming more common. Once the kids are grown, couples are discovering that they have nothing in common and decide to split. These so-called "gray divorces" have tripled in number since 1990. However, this creates a whole new set of considerations, particularly when it comes to retirement planning.
Following a divorce, everything in life changes. For gray divorces, it is likely going to change your retirement plans. In addition to the many adjustments you will make to your new life as a divorcee, you also need to update any estate plan you and your ex-spouse executed together. This should be handled by an experienced estate attorney once your divorce is finalized.
The following acts as a checklist of documents to review post-divorce:
- Power of attorney, health care proxy, and life insurance beneficiaries: you want to revoke the prior document and execute a new one.
- Retirement accounts: pensions, stock options or other benefits should be split pursuant to the terms of your divorce agreement. If you have an IRA, make sure the account is split in a way that avoids taxes and penalties.
- Create a new will and revoke the prior one: disinherit your former spouse.
- Retitle any personal or real property that was held jointly.
- Amend trust documents; if your ex is the trustee, appoint a new one.
- Change any payable on death accounts to someone other than your ex-spouse. Get it in writing, do not rely on phone verification (which also applies to the life insurance beneficiary as well).
Additionally, you may want to consider placing any important documents in a new spot that your former spouse is unfamiliar with and will not know where to find. If you had stepchildren from the former marriage and placed them in your will, do you want to keep them as heirs?
Finally, in the event you remarry, prepare a prenuptial agreement to protect your children. Otherwise, your spouse would inherit before your children. Irrevocable trusts are a good vehicle for this purpose. Discuss your concerns in detail with your estate attorney to make sure your future is properly protected.